Here's a quick look at the factors driving petrochemical markets in Asia this week.
AROMATICS
Asian paraxylene is expected to continue tracking the movement in downstream purified terephthalic acid this week, with scheduled turnarounds at PX plants in late February expected to lead to short supply in March.
Ulsan Aromatics, GS Caltex and S-Oil have all scheduled 30-40 day turnarounds at their PT plants from late February.
Asian benzene market is expected to remain bullish this week after being boosted last week by expectations of a rebound in Chinese demand after Lunar New Year and turnarounds scheduled at three major South Korean plants in March.
Even though end-users in China currently appear to leaning towards domestic product rather than imports to avoid logistical issues with taking delivery of imported cargoes during the Lunar New Year holidays, this bullish momentum shows little sign of slowing down.
In downstream styrene monomer, uncertainty over impending antidumping duties by China on US, South Korea and Taiwan is expected to continue hindering trading activity this week. Restarts at SP Chemicals' and Changzhou Dohow' plants and the start of commercial production at Qingdao Haiwan Chemicals' plant in China last week are also expected to increase supply and weigh on sentiment this week.
OLEFINS
The Asian ethylene market will likely remain supported this week amid signs of supply tightness.
Participants are awaiting the delayed restart of Taiwan CPC's No. 4 naphtha-fed steam cracker at Linyuan, which was pushed back by a week from January 19 due to a glitch.
The cracker, which is able to produce 380,000 mt/year of ethylene and 193,000 mt/year of propylene, was shut mid-November for annual maintenance. In downstream monoethylene glycol, prices came off two-year highs last week as the startup of several coal-to-MEG plants in China injected fresh supply into the market.
With coal-to-MEG cargoes cheaper to produce and offered at around Yuan 200/mt lower than traditional naphtha feedstock MEG cargoes, prices are expected to remain under pressure this week. Coupled with looming downstream polyester plant turnarounds, traders are starting to turn bearish.
Propylene prices hit a 33-month high last week and the uptick show little indication of slowing this week as buying interest remains supported by pre-Lunar Near Year restocking and limited supply amid plant turnarounds.
Butadiene prices hit a more than three-month high last Friday amid healthy demand for February cargoes and are also expected to continue rising this week, with supply crimped as naphtha-fed steam crackers increase their use of LPG as feedstock, which has the flow-on effect of reducing butadiene production.
METHANOL, MTBE
Methanol prices are expected to remain weak this week amid the prevailing steeply backwardated market structure, driven by weak demand expectations ahead of the Lunar New Year.
Asian MTBE spot market activity is likely to remain subdued this week amid sluggish fundamentals in gasoline markets, which are grappling with ample supply and thin demand. Sentiment is also bearish in China's domestic market as participants brace for increased regulation of oil products consumption taxes that are set to be implemented in coming months.
POLYMERS
Asian low density polyethylene prices look set to rise further this week amid tight supply. PE production was heard to be still high at above 90% of capacity in China although still below the peak seen last October, as raw materials coal and natural gas are redirected for heating.
